Today’s lesson in thinking like an economist are…

Today’s lesson in thinking like an economist: are there negative environmental effects of fracking? Probably. If you believe its staunchest opponents, fracking is an apocalyptically bad idea.

But what if (as economists are wont to do) we put a dollar value on that negative consequence? Would it be bigger than the economic upside to fracking? Turns out probably not.

Independent study assignment: since the gains will likely be private and the costs will likely be unpriced externalities like pollution, research the various methods of pricing externalities (e.g. Pigovian taxes, pollution permits) and write one page on the one you like the most.